1-Star Stocks Poised to Plunge: Lennar?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, homebuilder Lennar (NYS: LEN) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Lennar's business and see what CAPS investors are saying about the stock right now.


Headquarters (founded)Miami (1954)
Market Cap$4.6 billion
Trailing-12-Month Revenue$3.3 billion
ManagementCEO Stuart Miller (since 1997)
CFO Bruce Gross (since 1997)
Return on Capital (average, past 3 years)0.9%
Cash/Debt$1.1 billion / $4.5 billion
Dividend Yield0.6%
CompetitorsD.R. Horton
KB Home

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 59% of the 1,209 members who have rated Lennar believe the stock will underperform the S&P 500 going forward.

A couple of weeks ago, one of those Fools, All-Star TSIF, summed up the bear case for our community:

I believe there is a pick up going on, but I also believe the backlog in the mortgage market and the tick in 10 year yields will hold back growth, at least the type of growth that apparently fueled some of the homebuilders, including Lennar stock price. ... I think the October levels were definitely depressed, but I think the current market in general is overheated and due some stagnation at best, and a retrace at worse. Stocks that have the most rocket fueled burned during market takeoffs often feel gravity the hardest on a descent.

So, not really bearish against Lennar at these levels, but bearish against the rationality that grew it, and the general market so fast.

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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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